Alice Owns Land with an Adjusted Basis of $610,000,subject to a Mortgage

question 9

Multiple Choice

Alice owns land with an adjusted basis of $610,000,subject to a mortgage of $350,000.Real estate taxes are $9,000 per calendar year and are payable on December 31.On April 1,2015,Alice sells her land subject to the mortgage for $650,000 in cash,a note for $600,000,and property with a fair market value of $120,000.What is the amount realized?

• A)$1,370,000
• B)$1,372,219
• C)$1,720,000
• D)$1,722,219
• E)None of the above

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Definitions:

Profits

The financial gain realized when the revenue generated from business activities exceeds the expenses, taxes, and costs associated with maintaining the business.

Demand

The willingness and ability of consumers to purchase goods or services at various prices at a given time.

Industry

A collection of businesses and companies that produce similar goods or offer similar services within an economic sector.

Invisible Hand

A metaphor coined by Adam Smith to describe how individuals pursuing their self-interest unwittingly contribute to the economic prosperity of society.